Commercial Division Blog

Posted: August 18, 2023 / Written by: Jeffrey M. Eilender, Samuel L. Butt, Seth D. Allen, Joshua Wurtzel, Channing J. Turner / Categories Commercial, Arbitration

Court Grants Motion To Compel Arbitration

In a Decision and Order, dated June 21, 2023, in Employers Ins. Co. of Wausau v. Dominion Ins. Receivable LLC, NY Slip Op. 32097(U), Justice Margaret Chan granted Respondents’ cross-motion to compel arbitration and denied Petitioner’s motion to stay arbitration.  The Court explained:

"[P]arties to a commercial transaction will generally not be compelled to arbitrate in the absence of an express, unequivocal agreement to that effect.. . nevertheless, a party otherwise entitled to a judicial determination of the arbitrability of a dispute may waive that right by actively participating in the arbitration without seeking a stay pursuant to CPLR 7503 (b) or otherwise preserving their right to have the issue of arbitrability judicially determined" (Smullyan v SIBJET SA., 201 AD2d 335, 335-36, 607 N.Y.S.2d 316 [1st Dept 1994]; see also CPLR 7503 (b) [providing that "a party who has not participated in the arbitration . . . may apply to stay arbitration on the ground that a valid agreement was not made"]; Matter of Kidder, Peabody & Co. Inc. v Marvin, 161 Misc 2d 12, 16, 613 N.Y.S.2d 1011 [Sup Ct 1994] [collecting cases]).

Petitioner's application to stay the arbitration is denied and Respondent's cross-motion to compel arbitration is granted. The court need not determine whether a valid agreement to arbitrate here exists because of Petitioner's participation in the arbitrator selection process (In re N. Riv. Ins. Co., 291 AD2d 230, 233, 737 N.Y.S.2d 355 [1st Dept 2002] ("participation in the arbitration, i.e., by selecting an arbitrator, waives any objection that there was no agreement to arbitrate as a ground for vacating an award"]). Petitioner fails to explain why its string citation of cases going to general principles of waiver all outside the context of arbitration, apply to contravene the well settled law as to participation (NYSCEF # 43, ¶'s 38, 40).  Against Petitioner's argument — that even if there were a waiver, it "withdrew that waiver when it filed this action" — there are countless cases compelling arbitration where the requisite level of participation has already occurred, not to mention the clear statutory text of CPLR 7503 (b) (NYSCEF # 43, ¶ 40).

This case underscores how a party may waive objections to arbitration by participating in even the most preliminary steps of the arbitration process.  The attorneys at Schlam Stone & Dolan frequently handle motions concerning arbitration.  Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.